BlueWolf’s Weekly Market Sentiment (New and Improved with Better Flavor!)

[BlueWolf]

Market sentiment for the week ending August 23, 2019

Market sentiment for the week ending August 23, 2019.

Short Term Bias:Neutral
Long Term Bias: Bearish

I have included an annotated daily chart for the NASDAQ. The S&P and Dow are similar so I have not included separate charts for these indices.

I made a big bet this week when I went flat in all my long term positions. It’s not that I don’t still love most of the stocks I owned, it’s more that I am seeing bearish signs in the market that suggest a deep correction may be imminent. I admit that this call is somewhat anticipatory, and I may have taken myself out of the game too early. I just see other factors putting pressure on the market to correct, however. The recession fears, in particular, are palpable, and any bad economic news is likely going to use those fears as bear fuel. For now, some good economic news, including good retail sales figures and talk of economic stimulus, staved off any more panic selling, but I remain skeptical. It’s not that I think a recession in imminent. It’s more that I think the fears of a recession are putting pressure on the market that is likely to manifest itself as a significant correction. Hyper inflated valuations, fueled by growth, and a mixed result earnings season are also feeding those fears. Any signs that growth is slowing is going to take a toll on the market. Hence, my long term bias has changed to bearish for the first time in a while.

For the short term, I am not entirely certain about the mess that has occurred over the last two weeks. I could just as easily see the market moving up over the next several days as I could see it continuing to move down. A key level is Tuesday’s high, which may or may not be a lower pivot low. Should the short term action take out that high, around 8065, I might have to re-assess my sentiments. Clearly if the market makes a new high, the long term bull trend is alive and well and the mess that has been the market over the last two weeks was just a higher pivot low. We’ll just have to see. I’d welcome your opinions on it.

Annotated Daily Chart for the NASDAQ:
https://www.dropbox.com/s/gd42habem3...%20PM.jpg?dl=0

As for stocks I will be watching for day/swing treading opportunities to start the week, I have a few I’m interested in.
Longs: AROC, AYX, DBX (Still looking for that dead cat bounce), ENPH, REAL, RUHN
Shorts: KRNT, LTS, VRNT, WW

Good luck with your trading and investing.

[BlueWolf]

Market sentiment for the week ending August 30, 2019

Market sentiment for the week ending August 30, 2019.

Short Term Bias:Bearish
Long Term Bias: Bearish

I have included an annotated daily chart for the NASDAQ. The S&P and Dow are similar so I have not included separate charts for these indices.

Well, the market gapped up on Monday and had me wondering if my bearish fears were justified. Then Friday happened. At the very least, that bar has me bearishly inclined going into next week, hence my bearish short term bias. As for the long term, the fact that the indices continues to hover around the 62% Fibonacci retrace level of the long term trend’s last leg up is concerning. No, the indices have not yet broken that level, but all three indices have challenged that level three times now. It’s possible it will hold and the market will rebound, but I am still convinced that all the signs are pointing to more downside. As I said in my chart notes last week, recession and trade war fears are weighing heavy on the minds of investors and that is putting pressure on the market. That pressure is likely to relieve itself as a correction. Fear rules, things correct, and then one day everybody exhales and starts buying again. Such is the market. In any event, as you can see from my chart notes, I am still long term bearish, and I continue to sit in cash.

Annotated Daily Chart for the NASDAQ:

https://www.dropbox.com/s/4zz1dye0n12h0q0/Photo%20Aug%2024%2C%201%2037%2000%20PM.jpg?dl=0

Day/Swing Trade Watch List to start week:
Longs: AEM, KL, RUHN,
Shorts: ADVM, AROC, DBD, FL, GDOT, HAS, PEN, TELL, VRNT, WW

Good luck with your trading and investing.

[Louetta]

I was listening to a fellow named Sri-Kumar who gained some fame when last December Jamie Dimon said the US 10 yr bond was going to 4% and Kumar said next day on CNBC it would go to 2 before it went to 4. Anyway now it's at 1.6%.

Kumar says it's going to 1% which will end any debate about whether the curve is inverted, thus predicting recession for sure. His logic is that with the German 30 yr now negative, Europeans will start buying dollars to buy US bonds. Why not get more interest investing in the strongest economy? This demand will send US rates lower and the dollar higher (they have to buy dollars to buy our bonds) which, along with weak consumer demand in Europe, will hurt large US companies who sell lots of stuff outside the US. Recession fear and lower earnings for the large caps will further erode the stock market. Plus a settling of the trade dispute looks less and less likely any time soon, removing the chance of much upside.

All of which says you are correct in being bearish.

[BlueWolf]

Great information, Louetta.

[mimo_100]

from Forbes 10/23/2018

Recession Is Overdue By 4.5 Years, Here's How To Prepare
Cameron Keng

Recession is a “bad word” in politics, but it’s part of the natural economy. Similar to a tide ebbing and flowing, the economy will boom and bust. The technical term used by economists for the ebb and flow in business cycles are “expansions and contractions.” It’s unnatural for any nation to have an economy that is in an eternal expansion or boom.

There were 33 business cycles in the United States between 1854 and 2009 based on the National Bureau of Economic Research. The average length of a growing economy is 38.7 months or 3.2 years. The average recession lasts for 17.5 months or 1.5 years. A full business cycle on average is 4.7 years.

The longest contraction or recession of record in the United States was the Great Depression in 1929 that lasted 43 months or 3.6 years. The second longest recession was the “Great Recession” that we all experienced in 2007 that lasted 18 months or 1.5 years. This was caused by the real estate bubble that was created during our longest expansion period or boom between 1991 and 2001.

All the statistics above is to explain a simple concept. A booming economy will lead to a recession because the economy will overheat or create a bubble that will burst. The longer we artificially extend our expansion or economic boom, the bigger the recession we create. The natural business cycle’s economic boom will create more wealth than the recession will erode. When we artificially affect the economy, we throw the natural business cycle out of order. Thus, we may lose more than the wealth we’ve created during the economic boom.

How Did We Get Here – Today?

As of today, we’ve artificially extended our “expansion or economic boom” for a total of 111 months or 9.25 years. Governments have the ability to help stimulate the market through government spending and regulations. Increased government spending will increase the amount of economic activity. Regulations such as lowering interest rate will make it easier for businesses obtain the margins necessary to create a profit.

In the Great Recession of 2007, we used economic stimulus packages during the Obama era to inject life into our economy. Also, we lowered our interest rates to levels close to zero percent (0%). To compare, our Federal Reserve interest rate floated around 5.75% historically during the 1990s to the 2000s. We at one point in history had the Federal Reserve interest rate at 20%. I remember when I was a child; the bank paid 10.91% interest to the average American.

read the rest of the article here

https://www.forbes.com/sites/cameronkeng/2018/10/23/recession-is-overdue-by-4-5-years-heres-how-to-prepare/#6d1e1d3540d8

[BlueWolf]

Thanks, Tim. Good info. I’m not sure we are headed into a recession just yet, but I agree wholeheartedly that we are way overdue for one and the long term bear market that will come with it. I also agree that we have prolonged the bull market with monetary policy manipulations. At the rate the government is adding debt, it’s a good thing interest rate have stayed low. Nevertheless, because of the magnitude of our overspending, the cost of servicing our debt is rapidly rising as a percentage of our budget. Where have all the fiscal conservatives gone? I could count them on one hand if I were missing fingers.

In any event, I’m still sweating it. I made a bet here, but I’m not entirely convinced that the market doesn’t have more upside to it before we enter a bear market. The action is ambivalent. After that wide ranging red bar on Friday, we failed to get any bearish follow through today, instead opening with a gap up. The bulls and bears at currently at war over the near term fate of the market. Every attempt at a rally is beaten back down, but every attempt to start a hardcore cascade to the downside is being met with some buying. I’m still in wait and see mode.

[BlueWolf]

There are still lots of mixed signals from the market itself, but the following is an indicator that makes stocks a little more attractive for the long term.

https://www.cnbc.com/2019/08/27/the-30-year-treasury-yield-is-now-yielding-less-than-stocks.html

[Louetta]

There are still lots of mixed signals from the market itself, but the following is an indicator that makes stocks a little more attractive for the long term.

https://www.cnbc.com/2019/08/27/the-...an-stocks.html

Good article, BlueWolf. I listen to Buffett a lot and he always says when rates are lower stocks are a better buy.

The rate at which rates have fallen troubleth me. According to the treasury site the 30-yr started the month at 2.44% and right now it is quoted overseas at 1.94. Where will it be in another month and will this spark fears of recession, deflation, negative rates, or Bernie's election. I'm staying at 30% cash and about 1/3 of the rest is in preferreds which are more like bonds than stocks for the duration. Still fear a swoon in September/early October just because that often happens.

https://www.treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=yield

[BlueWolf]

... The rate at which rates have fallen troubleth me ...

You ain’t kidding. Wow!

[BlueWolf]

Market sentiment for the week ending September 6, 2019

Market sentiment for the week ending September 6, 2019.

Short Term Bias:Neutral
Long Term Bias: Neutral

I have included an annotated daily chart for the NASDAQ. The S&P and Dow are similar so I have not included separate charts for these indices.

There has been a major change in my sentiment this week and I have gone from being extremely bearish to being neutral for both the short and long term. The current mess in the major indices has started to coalesce and now it is clear that we are in some sort of sideways consolidation. In this particular case, this pattern looks a lot like a symmetrical triangle. You could make the case that there is a slight ascension to it, but to me, it looks symmetrical, which underscores the current indecision on the market. There is a battle royale going on between the bulls and bears, and it is unclear who will prevail. If the indices break out got the high side of the triangle, I would expect the indices to make new highs. Conversely, a break down from the triangle would probably lead to a test of the prior pivot low from the May/June correction. Holding or breaking that pivot could portend whether the longer term bullishness of the market will continue or whether we are witnessing the beginning of a long term bear market. I guess the operative phrase here for me is “wait and see,” and that’s exactly what I will be doing over at least the next week.

Annotated Daily Chart for the NASDAQ:
https://www.dropbox.com/s/xf211o3a81...%20PM.jpg?dl=0

I didn’t FIND much of anything to watch going into this week. Here are a few I might keep an eye one, though:
Longs: MRNA, AYX
Shorts: ADVM, AMED, CHGG

Good luck with your trading and investing.

[BlueWolf]

Midweek update for week ending September 6, 2019.

Just wanted to clarify an oversight on my part. In my haste to post, I didn’t really look closely at the S&P and Dow when I did my weekly update. There are definitely some divergences between the indices. I will just wait to see how the week plays out, and then discuss this in next week’s update, but the Dow and S&P definitely started the week more bullish than the NASDAQ. I will post a more detailed mid week update should something dramatic happen. More to come ...

[BlueWolf]

Midweek Update #2 for the week ending September 6, 2019

I won’t get into it in any detail since it’s almost the end of the week, but the question of direction seems to have been settled with a breakout to the upside today. Obviously, the China trade news was the catalyst. As a result of all this, I opened several positions today. More on all of this at next weeks update (Sorry, but I just won’t have much free time until Sunday).

[BlueWolf]

Market sentiment for the week ending September 13, 2019

Market sentiment for the week ending September 13, 2019

Short Term Bias:Bullish
Long Term Bias: Neutral

I have included annotated daily charts for the NASDAQ, S&P, and Dow.

Well the indices broke out of their consolidation patterns to the upside this week. Interestingly, the DOW technically broke out on Monday, three days earlier than the S&P and NASDAQ. It retreated a little on Tuesday, but quickly jumped back up on Wednesday and joined the other indices on Thursday for the big move up. In the annotated charts, I have highlighted the divergences that have occurred in the indices over the last week or so. Whatever the case, for the time being I am back in the bulls camp and have a short term bullish bias. As for the long term, I believe the indices will make new highs, and I want to be bullish, but I need a little more confirmation that the long term bullish trend we have been riding is still intact. I therefore go into the week with a neutral long term bias. Despite my reservations, I did start opening positions this week, and I’m now about 1/3 invested in the market.

In case you’re interested, here are the stocks in which I opened positions this week:

AAPL, AAXN, ABMD, AMZN, ANET, EDIT, LYV, NVDA, PANW, TDOC, TREX, and TTWO.

I’m still a believer in all of the stocks I wrote about in the “Stocks for the Long Term” thread, but for some of these I am waiting for good entries and a little more confirmation from the market before I dive back in completely. Among the stocks I am looking to re-enter are:

AAPN, AYX, BRK/B (maybe), CGNX (maybe), DOCU (I kick myself for getting out of this one), FB, GH, IIPR, ISRG, MA, MDB, MELI, MTCH, OKTA, ROKU, RVLV (maybe), SFIX, SHOP (a favorite of mine), TEAM, TREX, TTD (another favorite), TWLO, VEEV, ZEN, ZM, and ZS

Do you want me to post my entries and track my portfolio? If it helps anyone, I’ll be glad to do it. I did it for my last round of additions back in December. Let me know.

Annotated Daily Chart for the NASDAQ:
https://www.dropbox.com/s/5ivom57e5o...%20PM.jpg?dl=0

Annotated Daily Chart for the Dow:
https://www.dropbox.com/s/e38mhblh3d...%20AM.jpg?dl=0


Annotated Daily Chart for the S&P:
https://www.dropbox.com/s/r78faptmxt...%20PM.jpg?dl=0

In addition to the stocks I listed about for which I am looking for long term entries, I have a few stocks I will be watching for day and swing trades to start the week as follows:
Longs: AXL, SNAP
Shorts: CDMO, CHGG (This was an excellent short last week)

Good luck with your trading and investing.

[Louetta]

...snip...

Do you want me to post my entries and track my portfolio? If it helps anyone, I’ll be glad to do it. I did it for my last round of additions back in December. Let me know.

...snip...

I'd be more interested in learning what stocks you have added to your list of interesting issues. E.g. among your list of buys I don't recall seeing ABMD, PANW, TREX and TTWO before. But you already put a lot of effort into this so it's hard to ask for more.

Separately, the following article talks about BRK/B being near the low end of it's book value per share range which in theory makes it a good buy. I recall Buffett talking about this being an approach of interest though I don't remember any numbers and he wasn't making a recommendation (this was last April at the annual meeting).

https://seekingalpha.com/article/4289332-berkshire-hathaway-bet-buffett-cheap-rewarded?__source=newsletter%7Cwarrenbuffettwatch

[BlueWolf]

... among your list of buys I don't recall seeing ABMD, PANW, TREX and TTWO before. ...

Several of the stocks on my December list were stocks in which I already had a position, but to which I was adding. Since they were on my buy list at the time, I wrote them up. On this new list, there are several stocks that I owned prior to posting my December list to which I did not add. That’s why they didn’t get written up.

I will be happy to do write-ups on the new ones, specifically ABMD, PANW, TREX, and TTWO. A couple of cautionary notes on biotech/pharma stocks. They can be unusually volatile, making huge jumps in a single day. I also go into many of them knowing I will need a lot of patience, i.e. EDIT and CRSP. BTW, I forgot to add CRSP to my list. I am very interested in that stock.

Good thing I held off on entering the other stocks on my new list. A number of them are going through sell offs right now. With a little patience, I should be able to get some great entries.